Offer on home with underground oil tank

[EDWARD M.]

I put an offer on a two-family home with a decommissioned underground oil tank. I just found out that the oil-tank is actually under the ground floor apartment and the current owner will not allow for soil testing because it would require drilling into the floor in the apartment. He is providing DPW documentation showing the tank was decommissioned and inspected by the town in the early 90s. I have read that this is still a hazard and soil-testing should be done because the owner does not have documentation showing the tank was properly decommissioned and no leaks were detected (soil tested and cleared of spillage). I don't know what to do!

[Dalwin Garcia]

@EDWARD M. Hey! I just went through the same situation, only the oil tank was outside in front of the house. My buddy also went through the same situation in his most recent purchase. What you've read is absolutely correct! I wouldn't take the current owners word for it and I wouldn't go by any documentation he is providing. The only way to be 100% sure if the soil isn't contaminated is by testing it. If the owner does want to work with you, I would recommend getting out of this deal. Here's why, once you own the house and if it turns out the soil is in fact contaminated, to clean this entire mess up could cost you thousands and thousands of dollars! For my buddy, the underground oil tank was decommissioned and the soil came back negative so they just removed the oil tank. For my most recent purchase, the oil tank is still active and the soil came back negative as well. But I'm planning on either bringing that oil tank above ground or possibly just converting the house to gas. But either way, if he's not willing to work with you, this is a risk I wouldn't recommend anyone to take! Hope this helps!

[Damian LoBasso]

I agree 100% with Dalwin Garcia . Don't be afraid to walk as remediation will cost in the tens of thousands since in your case you'll be dealing with foundation limitations as well, not to mention the repair cost. If the tank was outside and cleared all tests, all you need to do is throw dirt on it.

[Eric Waterman]

Run! I have looked at deals with oil tanks, my contractor tells me to run every time. the testing is very expensive and god forbid you have to do environmental remediation in the event of a leak, that can cost up to 6 figures worst case. That sounds like a potential for disaster.

[Rich Zellmer]

You should be careful on this one if you dont have a 'No Further Action Letter' from DEP.  

I can tell you my experience.  I bought a house two years ago, had an oil tank that was removed. They provide me a DEP case number and a letter that the DEP case was closed.  However this year I went to refinace.  It turned out there was a second case open at the DEP.   What happened was the company provided the oil did an annual leak test(required for underground tanks) and it failed for a small hole on top, they opened a case with DEP.  Company comes out to remove tank and  open a case with DEP and do everything by the letter as far as testing the soil. That case gets closed but the 1st one never did.   Bank lets me close but wants the other case closed.

So now I have what I know is clean soil on a properly removed tank with a closed DEP case that I just need to get a duplicate case number closed.  I had to have them do new soil samples and write a report.  Cost me 6K to just test the soil and write the fancy report the DEP requires.  I think I could have price shopped this a bit but oil work is very expensive.

If you dont have an open case with DEP then you may have no one really care in the future but a 'No Further Action Letter' from DEP is really what they should have got when they removed it.  I have DEP webiste at the office where I was able to find me open case.  If you are okay posting the address or sending it me to me I can see if it shows up anywhere.  And/Or I will post the link when I find it.

Here is the nightmare...  You buy this house rent it for a few years and decide to sell.  Next buyer wants to do the samples, you let them and they find something.  They are obligated to report to DEP and your are f'd..   What happens in these cases is they basically need to dig out soil until they hit clean soil.  If they hit the water table first all sorts of crazy stuff happens. 

[Tim Pagano]

@Rich Zellmer is spot on.  The NFA is the key.  If that tank is under the house you're going to eat the repairs and it can get god awful expensive.  That's why they are handing you a story.  

All oil tanks will leak eventually.  I've had it happen to me and it's a long and drawn out process.  Not impossible to fix but they can get really messy legally.  Since they've admitted that the tank is under the house.  Think about what goes into fixing that problem.  You will need to jack up the house move it and then move it back onto the spot after it's cleaned up.  To clean up one deal we had to dig down nearly 15 feet.  I'll bet the house is in one of those neighborhoods that has 2 feet between the buildings.  Where would you put the house when they dig a like the one I had?

I'm not afraid of taking on oil tank projects, but this one sounds like it might be a real headache.  It is not for a newbie who doesn't have a large supply of Tums and Advil.   Think twice before doing this deal.  

[Michael Fasano]

Agree with everyone else, run far away. It can get ugly quick, and a hard re-sale.

[Andrew Johnson]

EDWARD MAURICIO Run. Any prudent buyer is going to want/require soil testing. The current owner should know that. I'd imagine they don't want to run the risk of finding out there is contamination. As others have stated, remediation costs aren't cheap.

Walk away, see if the property is still on the market in 60 days and then ask again about openness to testing.

[Allie S.]

@Dalwin Garcia did you ever end up converting the propertY from oil to gas? 

[Vaughn Smith]

For anyone reading... Oil to gas conversions can be pretty costly $18k-$25k+ you should only go through with one if the property is a steal or a cash cow. Typically when a tank is present the seller removes it unless other wise specified in the terms of the sale, tank removal is about $2-$3k if the soil underneath is contaminated the contamination will need to be remediated, here's the thing about contamination, it doesn't always cost tens of thousands of dollars to remediate, and not every property with an underground tank has contaminated soil. The other thing about contamination is you never know how bad it is until you're under contract and have the tan removed and soil tested, if you are looking for a sure thing you may want to avoid as-is sales and many off market "deals". In the example at the top of this thread id avoid the deal as it looks like the buyers hiding something or try to renegotiate the terms of the deal if you stay with it.